Alex DeMarban

Hilcorp finances to stay private; ratings agencies eye debt for deal

After months of review, Alaska state regulators on March 12 granted confidentiality to Hilcorp Energy’s finances, removing a hurdle for the company as it seeks to buy BP Alaska’s pipeline assets as part of a $5.6 billion deal. The Regulatory Commission of Alaska said the Houston, Texas-based company and its subsidiaries can keep their financial statements out of the public eye. Hilcorp in August announced it intended to buy BP Alaska’s assets, including the company’s 49 percent stake in the 800-mile trans-Alaska pipeline, and interests in related pipelines. The companies’ financial statements are declared to be “confidential as a matter of law,” the agency wrote in a 19-page order. More than 200 people have filed comments with the RCA, many concerned about Hilcorp’s request for privacy. Skeptics have expressed concern that privately owned Hilcorp, a small company compared to BP, may not have the financial capabilities to handle unexpected events such as cleanup costs for a major oil spill. They also have said the transaction involving the trans-Alaska pipeline is so important to the state’s economy that the public needs a greater understanding of Hilcorp’s finances. Hilcorp, known for buying and reviving aging oil and gas fields, has said it has provided unusually granular details of its operations at the agency’s request. The oil company has also cautioned that disclosing that and other financial information would hurt its competitive advantage. The five-member commission said its interpretation of state statute prevents it from releasing the documents because they are not required to be filed with the Federal Energy Regulatory Commission. Commissioner Stephen McAlpine was the lone dissenting member. He said the companies did not originally state, as required, that they were seeking the confidentiality protections of the statute. “With this in mind, I believe that airing these documents publicly and subjecting the entire transaction to intense debate far outweighs the petitioners’ interest in keeping them confidential,” McAlpine said in a two-page dissent. “Instead, Hilcorp has invited an unnecessary public relations nightmare over what may come of the lifeblood of our state. Now public scrutiny may well be based on speculation as to what the documents may or may not say rather than a complete airing of the facts as they exist,” he said. Hilcorp and BP filed for a transfer of the pipelines assets in September. The commission will decide on that larger issue by Sept. 28, the commission’s order said. Philip Wight, an analyst with Alaska Public Interest Research Group, which has taken a lead in questioning the deal, said the commission’s order sets a “regressive precedent.” He said the public interest group is considering legal action to reverse the commission’s decision. “By ruling on a murky technicality, the commission failed to do its job to protect the public interest,” Wight said in a statement. “Alaskans are being denied the information we need to be good stewards of our resources.” Agencies eye Hilcorp debt rating Because it is a privately owned company, little is publicly known about Hilcorp’s financial picture. For skeptics of the deal, a major question has been whether Hilcorp has the financial muscle to pull off the large acquisition without putting important obligations, such as infrastructure maintenance, at risk. Two major credit rating agencies, Moody’s Investors Service and Standard & Poor’s, have expressed concern that the oil company will take on large amounts of debt to finance the deal. Analysts with both agencies have described Hilcorp’s current rating as a good one. But if Hilcorp borrows too much, the agencies could downgrade the oil company’s rating. That would make it more expensive for Hilcorp to borrow money because investors will demand larger interest payments. If Hilcorp borrows too much, it could put itself and investors at financial risk, said Jim Posey, a former commissioner for the Alaska Public Utilities Commission, a precursor to the Regulatory Commission of Alaska. (The RCA is the state agency that will decide whether Hilcorp’s finances can be kept confidential.) “I think the rating agencies are looking at them and saying this is a big bite for them, and in an environment where oil is somewhat in decline, they’re rightfully asking, ‘What is the prospect of this investment?’” said Posey, also former general manager for Anchorage Municipal Light & Power. Hilcorp did not respond to requests for comment for this article, including how much money it might seek to borrow to finance the acquisition. Moody’s expressed concern about Hilcorp’s rising debt in a December report. Hilcorp has successfully invested in mature oil fields, exploiting under-performing wells and creating diversified operations across the U.S., the report said. “With a seasoned management team, (Hilcorp Energy) has continued to demonstrate a strong track record of replacing production and adding reserves through the drill bit and via targeted acquisitions,” Moody’s said in the report. But the company’s debt levels rose over the past year, the report said. While Hilcorp will grow significantly as it acquires BP Alaska’s oil production and reserves, it also has future expenses to account for, including retiring old assets, Moody’s said in the report. “If the BP acquisition were to be mostly debt funded, debt levels … could approach $6 billion from the roughly $2.6 billion outstanding at September 30,” Moody’s said. Hilcorp can avoid a rating downgrade by employing “a prudent mix of debt, an equity infusion, and/or alternative funding,” Moody’s report said. Hilcorp has done well under the leadership of its billionaire founder, Jeffery Hildebrand, the report said. “The singular control Mr. Jeffery Hildebrand wields over (Hilcorp Energy’s) operations through his ownership of (Hilcorp Energy’s) general partner is also considered in its credit profile; however, the company has prospered under his control and leadership, while maintaining a strong operating profile,” Moody’s said. Andrew Brooks, a Moody’s analyst, said in November that the credit rating agency needed to see Hilcorp’s financial plans for the acquisition as part of its credit review of the company. Brooks could not be reached for additional comment. Standard & Poor’s put Hilcorp on notice of a possible ratings downgrade in August, shortly after the deal with BP was announced. A review that could lead to a downgrade will be closed once the sale is complete, perhaps late this spring, the agency said. Ben Tsocanos, an analyst with Standard & Poor’s, said the agency has seen Hilcorp’s financial plan. The plan is not publicly available, he said. “We were of the opinion they’d go to market around now (to borrow money),” Tsocanos said. “In general, they are a pretty decent operator,” Tsocanos said of Hilcorp. The Wall Street Journal reported last month that Hilcorp plans to purchase BP Alaska’s assets entirely by using debt. But the newspaper said in that report that coronavirus fears had increased challenges for energy companies trying to borrow money. That could help put pressure on Hildebrand to contribute some of his own money to help pay for part of the deal, the newspaper reported. Denali Kemppel, general counsel for Hilcorp Alaska, told state lawmakers on Feb. 26 that Hilcorp, with its history of acquisitions, has built relationships with a sophisticated group of banks. The company is in discussion with those banks to help determine the best plan, she said. “We are currently still evaluating all options to finance the transaction,” she said, noting that Hilcorp has made two payments to BP for a total of $500 million, with future payments planned. BP and Hilcorp have addressed public concerns about Hilcorp’s financial capabilities in statements filed with the Regulatory Commission of Alaska. Hilcorp is not trying to avoid responsibility to prove it’s “sufficiently well-capitalized,” and is instead concerned that disclosing its finances will hurt its competitive advantage, the oil companies said in a document it sent to the commission in December. The oil companies have also said Hilcorp has provided all required documents to regulators overseeing the sale. Corri Feige, the Alaska Department of Natural Resources commissioner, has said the company has been transparent and forthcoming in providing information the state needs to oversee the transaction, including for a “stress test” to determine Hilcorp’s ability to respond to a major accident should one occur. The oil price crash could delay Hilcorp’s plans to borrow money, said Tsocanos with Standard & Poor’s. Prices plunged more than 20 percent, amid a price war between Saudi Arabia and Russia and depressed demand due to the coronavirus outbreak. Prices for North Slope crude fell to less than $35 a barrel on March 9, levels not seen in four years. For now, the lower prices could make it more difficult for Hilcorp to borrow cash at favorable terms, Tsocanos said. “I don’t think it’s realistic for them to go to capital markets with oil at $35 (a barrel), so I think they will wait for the dust to settle a little bit,” Tsocanos said. Monday’s oil price crash eroded a large chunk of Hildebrand’s wealth, according to Tom Metcalf, a reporter with Bloomberg. Hildebrand’s estimated wealth fell from $5.4 billion to $2.4 billion, pushing him off the list of the world’s 500 wealthiest people, Metcalf said in an email, citing calculations from the Bloomberg Billionaires Index.

JPMorgan Chase follows Goldman Sachs in Arctic exit

JPMorgan Chase says it will no longer finance new oil and gas projects in the Arctic. “JPMorgan Chase is expanding its commitment to a low-carbon economy and further supporting the clean energy transition,” the bank said in an email to reporters on Feb. 24. It is the second big U.S. lender to back away from potential support for projects such as drilling in the Arctic National Wildlife Refuge in recent months. Goldman Sachs in December said it would stop financing new oil exploration in the Arctic. Goldman Sachs’ announcement prompted Gov. Mike Dunleavy’s administration to retaliate, removing it from a billion-dollar plan to borrow money to pay tax credits to Alaska oil and gas drillers. On Feb. 24, groups opposed to drilling in the refuge celebrated news reports about JPMorgan’s plans. The bank has been the top funder of Arctic oil and gas projects in recent years, according to a report by the Rainforest Action Network, the Sierra Club and other advocacy groups. “We’re glad to see America’s largest bank recognize that the Arctic Refuge is no place for drilling, and we hope that soon other banks and the oil companies they fund will follow along,” said Bernadette Demientieff with the Gwich’in Steering Committee. The committee, which advocates for 15 Gwich’in communities in Alaska and Canada, has argued that drilling will hurt caribou and other subsistence foods. The Gwich’in Steering Committee and Sierra Club members have met with large U.S. banks in recent months, said Ben Cushing, a campaign representative with the Sierra Club in Washington, D.C. The groups argue the banks’ reputations could be damaged if they provide financial support for drilling in the Arctic. Several banks outside the U.S., including Barclays in London and Crédit Agricole in France, also have said they won’t support new oil and gas projects in the Arctic, Cushing said. “It’s been mostly firms outside the U.S. until recently,” he said. JPMorgan’s new climate change initiative will not allow “financing for new oil and gas development in the Arctic,” among other steps, according to a statement from the bank that was emailed to reporters Feb. 24. The bank’s plans will be announced at an annual investor day meeting on Feb. 25. Dunleavy in December said that he has “serious questions” about doing business with any company that isn’t willing to work with Alaska. Dunleavy told Fox Business in a December interview that drilling in the refuge is important to the state and national economy. The governor’s office did not immediately provide comment on JPMorgan’s decision on Feb. 24. The $67 billion Alaska Permanent Fund had about $950 million invested in JPMorgan funds in December, according to the Permanent Fund’s latest monthly report published online. Craig Richards, chair of the fund’s board, said the board will not get involved in political decisions to determine its investments. Richards is also a former Alaska attorney general who is now representing a group opposing the recall effort against the governor. Richards said as an Alaskan, it is personally “disappointing to me to see banks that are bowing down to political pressure by certain activists and that are making political decisions, not business decisions.”

Early release of Pebble report draws strong reactions

A new version of a federal environmental review for the proposed Pebble mine has angered the mine’s opponents and encouraged its developer. The Army Corps of Engineers will use the final review to decide whether to give the controversial mine a key permit it needs before it can be built. The Corps had provided the report to several cooperating agencies involved in the review process, such as state and federal agencies and tribal governments. The Anchorage Daily News obtained an executive summary of the Corps’ preliminary final environmental review that was leaked to reporters. The report could foreshadow what’s to come. Tom Collier, chief executive of developer Pebble Limited Partnership, is pleased. He said the report’s release, and its major conclusions, indicate the company will see a decision in its favor by mid-2020. Pebble opponents that have seen it are not happy. They say the proposed copper and gold mine in Southwest Alaska will threaten the Bristol Bay region’s valuable salmon fishery, and they will go court to stop it. On Feb. 11, groups from the Bristol Bay region issued statements saying the document does not address local concerns raised in Congress about shortcomings in the review process. U.S. Sen. Lisa Murkowski in particular criticized the process, previously saying the mine shouldn’t be permitted unless the Corps addresses data “gaps” raised by the Environmental Protection Agency and other entities. Very little has changed between the draft environmental review issued last year and the preliminary final review, said Alannah Hurley with the United Tribes of Bristol Bay, representing 15 tribes from the region. The Corps still has not analyzed a tailings dam failure, she said. “That’s outrageous,” she said. “That’s one of our biggest concerns, when you store toxic waste at the headwaters of the last great wild sockeye salmon fisheries on earth.” She said groups will sue to stop the mine. The United Tribes of Bristol Bay and other anti-Pebble groups have already sued the EPA to try to reestablish one roadblock against the mine. John Budnik, a Corps spokesman, said there have been several revisions to the draft report. He said it addresses three spill scenarios. But the report says the Corps did not model the effect of an “extremely unlikely” catastrophic failure of a tailings dam, like what occurred at the Mount Polley mine in Canada in 2014. Public commenters had requested such a review. Tailings are a mine’s finely ground waste material. The report says the Corps determined that modeling for such an event was “inappropriate.“ Pebble has proposed a design with “water-reduction measures” for the tailings, such as drainage and air flow. The facility would have less chance of failure compared to a breach of “water-inundated tailings,” such as at the Mount Polley mine, the report says. “The bulk (tailings storage facility) would remain in place in perpetuity in ‘dry’ closure, further reducing the long-term spill risk,” the report says. Commercial Fishermen for Bristol Bay also said the preliminary final report is insufficient. “The preliminary final EIS is more of the same; this administration’s priority is a purely political process that completely ignores well-documented science and the voices of Alaskans,” said Katherine Carscallen, director of the fishermen’s group, in a statement. She said the report severely underestimates the risks of the mine to salmon and other resources. Collier with Pebble said Tuesday it’s “absolutely false” to say there have been only small changes to the preliminary final document. The Corps has held numerous meetings and delayed a final decision to address concerns with the draft report, he said. Also, Pebble has changed the design of the proposed port facility and roads and bridges to reduce impacts to waters and wetlands, as spelled out a compensatory mitigation plan it has submitted to the Corps, he said. It has proposed plans to help protect waters in the region, including improving wastewater management in three communities and taking steps to improve salmon passage in 8.5 miles of streams. The Corps’ major conclusions remain the same, Collier said. The report shows the mine would not hurt the Bristol Bay salmon fishery, he said. He pointed to a section on commercial fishing. It says that under normal operations, development alternatives would “not be expected to have a measurable effect on fish numbers and result in long-term changes to the health of the commercial fisheries in Bristol Bay.” Collier pointed out a section on subsistence that says, “Overall, impacts to fish and wildlife would not be expected to impact harvest levels, because no population-level decrease in resources would be anticipated.” Carscallen, with the fishing group, said Collier is wrong to say there won’t be harm to the fishery, The report says the development’s footprint will harm 100 miles of salmon stream, she said. The report indicates the final decision will be in Pebble’s favor, Collier said. “That’s the only conclusion you can reach,” he said.

Tax increase debate back on as signatures filed

A group seeking to raise taxes on major oil producers in Alaska rolled a flatbed dolly stacked with boxes of signature books to the Alaska Division of Elections office in Anchorage on Jan. 17, setting the stage for what’s expected to be another costly political battle. Members of the “Vote Yes for Alaska’s Fair Share” group said they turned in 44,624 signatures, well beyond the amount needed to put the measure before voters. If it passes, the measure would bring the state close to $1 billion extra in oil-production taxes each year, supporters say. The money could be used to shrink the Alaska’s giant deficits while keeping state services in place, they say. “We have given away billions of dollars (to the industry),” said Robin Brena, an oil and gas attorney and chair of the group, speaking to a crowd of supporters at the elections office. The two-page text of the ballot measure explains it would affect the taxes applied to the state’s three largest oil fields, Prudhoe Bay, Kuparuk and Alpine. BP Alaska, ConocoPhillips and ExxonMobil Corp. are the major leaseholders at Prudhoe Bay. ConocoPhillips is the major owner at Kuparuk and the Alpine. A group called OneAlaska formed to fight the measure in November. It is led by small-business owners, a union leader, a Native corporation chair and others. Much of its funding so far is coming from oil companies, primarily ConocoPhillips and Hilcorp Alaska, the company that plans to buy BP’s assets in Alaska. The ballot measure would boost production taxes on the oil industry by more than 300 percent, OneAlaska said in a statement on Jan. 17. Such a spike would force any industry to cut back on its investment in the state, the group said. Gary Dixon, secretary and treasurer with Teamsters Local 959 and part of the anti-initiative group, said in a statement that his organization opposes the ballot measure. The union represents construction workers, truck drivers and others. “My job is to protect jobs for Alaskan workers, full stop,” said Dixon. “This ballot measure will make it harder for Alaskans to get and keep jobs, from Kotzebue to Ketchikan.” The state estimates the industry is expected to pay $381 million in production taxes this year. Total petroleum revenue from production tax, corporate tax, property tax and royalties is forecast to be $1.56 billion. Roger Marks, a former petroleum economist for the state who has no affiliation with the anti-initiative group, said if the measure was already in effect, the industry would pay about $1.4 billion this year. Ed Davis, a retired engineer for Alyeska Pipeline Service Co., was one of the supporters at the Division of Elections on Jan. 17 when “Vote Yes for Alaska’s Fair Share” turned in its petition books. Davis said the oil industry can afford to pay more. Davis collected more than 800 signatures in Fairbanks, during a cold streak when the worst temperatures plunged to about 40 degrees below zero. He stood outside near the solid waste facility where people bring their trash, he said. The oil industry does not deserve all the breaks and benefits it gets in Alaska, he said. Bill Popp, a co-chair of the anti-initiative group and president of the Anchorage Economic Development Corp., said the measure would hamper the state’s economic recovery. It would hurt profit margins in the state’s oil industry and force companies to look outside Alaska for better investments, he said. Oil companies are now investing in new fields in Alaska. But the “massive” tax increase will push investment away, he said, adding that will have devastating impacts on the state economy. “This (initiative) is another simplistic approach to a complex problem,” Popp said. “To once again say, ‘Tax the oil industry, it will solve all our problems,’ is such an ill-advised idea. It isn’t going to work.” Alaska is one of the most profitable places for the oil industry to operate, and will remain so if the initiative passes, members of the initiative group say. Jane Angvik, a primary sponsor of the measure and former Anchorage Assembly member, said ConocoPhillips has boosted dividends for its shareholders. Meanwhile, the state — now facing a $1.5 billion deficit — has reduced Permanent Fund Dividends paid to Alaskans. The extra money generated by the tax could support higher PFD payments, initiative supporters say. The last ballot fight over oil-production taxes in 2014 produced more than $14 million in political spending, with the oil industry vastly outspending opponents. The oil industry won that battle with 53 percent of the vote. Oil companies and partners spent about $145 for each supportive vote, according to a review of state records. The losing side spent about $7 per vote. In the current oil tax battle, the two sides have so far raised about $300,000, according to reports. Members of the “Fair Share” group said they expect the measure to go before voters in the November election. The Division of Elections still must certify that the group has 28,501 signatures from registered Alaska voters in at least 30 of the state’s 40 House districts, they said. The group said it met requirements in 36 House districts. The measure’s changes to taxes at the three major fields include: • The gross minimum production tax, which has gone into effect in recent years under low oil prices, would increase from 4 percent to between 10 percent and 15 percent, depending on the price of oil. • The net production tax, which has kicked in when oil prices are higher, would eliminate the per-barrel credit provided to oil producers. • Tax returns and other documents provided by oil and gas producers would be public information, instead of confidential documents. • Companies won’t be allowed to deduct costs at other fields from tax payments at the three major fields, Brena said.

Defense spending bill repeals 8(a) restrictions

The National Defense Authorization Act that is headed to the president’s desk after a Dec. 17 vote in the Senate includes a provision that will boost Alaska Native corporations’ access to high-dollar, no-bid contracts approved by the U.S. military, officials said. The new provision relaxes a 2010 limit that restricted Native corporations’ ability to secure large contracts that had brought billions of dollars to the companies in earlier years, Sen. Dan Sullivan said in an interview after the bill cleared the Senate. Those big, sole-source contracts were awarded under changes to the Small Business Administration’s 8(a) program, which were designed to benefit Indian tribes, Alaska Native corporations and Native Hawaiian organizations. Congress created the program to help thousands of Native shareholders that own the companies and disadvantaged Native communities, Sullivan said. Sullivan co-sponsored the new provision with Sen. Mazie Hirono, D-Hawaii, the senator’s office said. “This will have a positive impact for the state’s economy and its citizens, and for Native corporations that are a huge source of growth in our state,” Sullivan said by phone. The $738 billion defense spending bill for fiscal year 2020 passed the Senate 86-8 on Tuesday, after clearing the House last week. President Donald J. Trump is expected to sign it soon, Sullivan said. Rep. Don Young helped get the contracting provision passed in the House, Sullivan said. Native corporations are a major player in the government contracting business, thanks in part to the late Alaska Sen. Ted Stevens, who is credited with spearheading the Native contracting program’s creation in the 1980s. After Stevens lost his Senate seat in 2008, former Missouri Democrat Sen. Claire McCaskill and the late Arizona Republican Sen. John McCain took aim at the Native 8(a) program, Sullivan said. “This was essentially removed in kind of a sneaky provision,” Sullivan said. The limit enacted in the 2010 defense spending bill required federal contracting officers to justify no-bid contracts above $20 million, now $22 million, adjusted for inflation. It required approval from the top — the secretaries of the Army, Navy and Air Force, Sullivan said. With those limitations in place, only a small number of contracts above $20 million have been awarded to Native contractors, Sullivan’s office said. Contractors didn’t want to take relatively small contracts all the way up the military chain, Sullivan said. The new provision boosts the justification threshold for the no-bid contracts to $100 million. It allows approval from the head of the contracting activity, or their designee, instead of the secretaries. The Alaska Native Village Corporation Association, representing 177 Native village corporations, praised the change to the “overly burdensome” Department of Defense requirements. Undoing the provision has been a leading goal for the association, said Hallie Bissett, the group’s executive director. Only a handful of village corporations have benefited from the 8(a) program, with the 2010 provision a limiting factor, the group said in a statement. “This provision placed an onerous requirement on contracting agencies that worked with village corporations,” she said. “It created confusion for contracting officers, and resulted in overly high, undue levels of contract approval scrutiny for our village corporations that are inconsistent with the goals of lowering contract costs and reducing risks for the contracting agencies.” Chugach Alaska, a regional Native corporation in Southcentral Alaska, praised the change. It said 8(a) benefits are an “economic engine” to help Native corporations provide dividends, scholarship, jobs and other benefits to thousands of Native shareholders. “Beyond that, the Alaska Congressional delegation and their staff understand that the success of (Native corporations) echoes beyond our Alaska Native shareholders to help create jobs, inject capital and help strengthen the state’s economy,” said Sheri Buretta, interim president of Chugach. The Alaska Federation of Natives “appreciates that Senator Sullivan heard the concerns of these key Alaskan businesses,” said Julie Kitka, president of the group. “We commend him for getting the provision in the bill and Senator Murkowski and Congressman Young for voting in support of the (act).” The Native American Contractors Association in Washington, D.C., called the change a “milestone” that will create opportunities in Native communities across the U.S. “(The association) believes that the provision will increase business opportunities for Native 8(a) contractors and allow NACA members to continue their work enriching their communities with jobs, educational opportunities, dividends, and investments,” said Annette Hamilton, the association’s president.

Group forms to oppose oil tax hike initiative

A new group calling itself OneAlaska has formed to fight a ballot initiative that seeks to boost production taxes paid by Alaska’s largest oil companies. The group — consisting of small-business owners, a union leader, a Native corporation chair and others — filed with the Alaska Division of Elections this week, a statement from OneAlaska said Nov. 7. The Alaska Oil and Gas Association, a trade group representing the industry, is a leading contributor to the group. The chair is Chantal Walsh, former director of the state’s oil and gas division under previous Gov. Bill Walker. “With several significant, new development projects in the works, adding a punitive new tax on companies that are trying to invest in Alaska is the wrong idea at the wrong time,” Walsh said. OneAlaska will oppose Vote Yes for Alaska’s Fair Share, which registered as a campaign group with state regulators in August. That group must collect 28,501 signatures from across Alaska in support of its two-page proposed “Fair Share Act.” It hopes to get the measure on the ballot during next year’s election. The proposal would alter the state’s 2014 oil production tax. It would apply to the North Slope’s large, legacy fields — currently Prudhoe Bay, Kuparuk and Alpine — held by major oil companies, according to Robin Brena, a member of the initiative committee leading the effort and an oil and gas attorney who worked on Gov. Walker’s transition team. Brena has said the measure would bring in about $1 billion extra in production taxes, if approved by voters. BP, the current operator of the Prudhoe Bay oil field, has estimated it could cost companies up to an extra $2 billion. The industry paid $750 million in oil and gas production taxes in the 2018 fiscal year, according to state figures. In an interview Nov. 7, Brena said Alaska is not getting enough in production taxes from the state’s major oil companies. If voters approve the Fair Share initiative, Brena asserted the companies will still be very profitable in Alaska and more money will stay in the state, helping the economy, not hurting it. The measure would require that tax returns and other documents from oil and gas producers would be public information, instead of confidential documents. “Whether you agree with us, or disagree with us, that’s one thing,” he said. But Alaskans should have the chance to decide if they’re getting their fair share for oil production, he said. Vote Yes for Alaska’s Fair Share reported in early October that it had raised just more than $45,000. Brena is listed as the top donor with a $25,000 cash injection. Co-chairs of the new group that will fight the measure include Crawford Patkotak, chair of Arctic Slope Regional Corp., which represents Alaska Natives from the oil-rich North Slope; Nicholas Begich III, a nephew of former U.S. Sen. Mark Begich; former Anchorage Rep. Jason Grenn, who served in the Legislature as an independent; Bill Popp, president of the Anchorage Economic Development Corp.; and Gary Dixon with Alaska Teamsters Local 959, which represents more than 5,000 people, including airline pilots, construction workers and truck drivers. “The ballot box is the wrong place to enact complicated tax policy, especially policy that would damage our economy, both in Anchorage and statewide,” Popp said.

RCA will rule on release of Hilcorp finances

An increasing number of Alaskans are calling for greater financial transparency from Hilcorp, the privately owned company seeking to buy BP’s North Slope assets, in part to ensure it has the financial muscle to respond to a potentially costly accident if the deal goes through. Under the regulatory process to approve a key element of the transaction, Hilcorp has asked a state agency to keep its recent years of financial records from public view, citing concerns that disclosure will hurt its competitive advantage. Some think those records should be made public. “We need to see their finances because they will become the most important oil and gas company in Alaska, full stop,” said Phil Wight, who is studying the proposed deal for the Alaska Public Interest Research Group, a consumer rights group. BP, operator of the Prudhoe Bay oil field, announced in August that it will sell its Alaska assets to Hilcorp for $5.6 billion, setting the stage for what many say will be the largest North Slope deal in a generation. The sale includes BP’s share in wells, pipelines, oil tanks and other hardware, much of it built in the 1970s, including the 800-mile Trans-Alaska Pipeline System. The companies expect to finalize the deal next year. The Regulatory Commission of Alaska is overseeing the part of the transaction involving the trans-Alaska pipeline. It is holding a public comment period that’s set to end Nov. 8. Under state requirements, the RCA must decide whether to grant Hilcorp’s request to keep its financial records confidential, in a decision that will balance the public interest versus the company’s concerns over its bottom line. At least one powerful state lawmaker appears to support Hilcorp’s confidentiality request. Some Alaskans have applauded the deal in hopes that Hilcorp will boost Alaska’s economy by increasing exploration and squeezing more life out of the oil fields. The transaction, among other major changes, would give Houston, Tex.-based Hilcorp a 48 percent stake in the pipeline and operator Alyeska Pipeline Service Company. That’s a bigger share than pipeline co-owners ConocoPhillips and ExxonMobil. Skeptics of the proposal complain less is known about Hilcorp because it lacks the financial disclosure requirements of publicly traded companies such as BP, Conoco or Exxon. Those much larger companies regularly update shareholders on cash flow, debt and other data under federal reporting rules. Hilcorp’s finances are a black box, said Wight, speaking Nov. 6 to a small group in Anchorage at an event organized by the public interest group. He questioned whether Hilcorp can afford to clean up a costly major oil spill if one occurs. “We are not saying the deal should not go forward, but we want to make sure the public’s interest is protected,” he said. Hilcorp is known for revitalizing old fields, including in the small Cook Inlet province near Anchorage, where it’s become the dominant oil and gas producer after arriving in Alaska eight years ago. It’s been criticized for a string of accidents and violations, but praised for taking steps to improve that record. BP has told the RCA it will retain responsibility for the huge cost of dismantling the pipeline. Dozens of public comments have been submitted to the RCA so far. Many have asked for more information about Hilcorp’s finances, as well as more time for people to comment. The agency has extended the comment period once, adding an additional 21 days. Republican Senate President Cathy Giessel told the RCA that the sale, once complete, will bring “substantial positive benefits” in the form of Alaskan jobs, investment, oil production, and state and local revenue. With the “appropriate insurance and financial sureties” that will be required by the RCA and other agencies, Giessel said she believes Hilcorp is “highly fit and able to hold BP’s share of the (trans-Alaska pipeline) assets.” Giessel said she trusts the RCA and other state agencies will have full access to Hilcorp’s confidential financial records in order to “facilitate a responsible decision by the government.” “I would not like to think Alaska is willing to require, as a condition for any type of company undertaking business on our land or with our resources, disclosure of confidential financial information that could adversely impact a company’s competitive position as we seek their investment dollars,” she wrote. RCA spokeswoman Grace Salazar said the five-member commission will have 30 days after the end of the comment period to weigh Hilcorp’s confidentiality request and determine if the companies’ joint application for the ownership transfer is complete. The commission could take up to six months to determine if it will permit the transfer. Rep. Geran Tarr, D-Anchorage and co-chair of the House Resources Committee, told the RCA that not enough is known about the proposed transaction and the impact it will have on Alaska. She wants the agency to extend the comment period through the holidays. Tarr said the committee plans to hold an informational hearing on the proposed sale next year. Andrew Brooks, an analyst with Moody’s Investors Service, a major credit rating agency, said Hilcorp has a good rating for a company of its size. It typically does not heavily rely on debt and generates “positive free cash flow.” But Moody’s was concerned enough about the transaction to launch a “review for downgrade” of Hilcorp’s rating after the deal was announced. Hilcorp has not yet said how it will finance the deal. The ratings review can’t be completed until those details are known, Brooks said. Moody’s presumes Hilcorp will take on a “fair” amount of debt to buy the Alaska assets, Brooks said. Too much could help lead to a ratings downgrade. “It’s a very sizable acquisition for Hilcorp, certainly a much larger acquisition than they typically have undertaken,” Brooks said. Brooks directed questions about Hilcorp’s net worth to the company itself. Company officials on Nov. 8 did not respond to a request for comment. Former Alaska Senate President Rick Halford said there hasn’t been enough scrutiny and public input on the proposed deal. “It’s been amazingly quiet in my opinion,” Halford said on Thursday. In 2000, Halford, a Republican, chaired the legislative committee that helped oversee a previous blockbuster deal on the North Slope, resulting in ConocoPhillips predecessor Phillips Petroleum buying ARCO Alaska’s assets for $6.5 billion. “There needs to be a real economic analysis, from the state, of this transaction,” Halford said. It should include a review of the costs and responsibilities of dismantlement and cleanup of everything from the pipelines to wells to buildings, he said. “There are a lot of old wells up there,” he said. Halford said he’s worried Hilcorp may be too small to handle the potential liability associated with the North Slope’s aging infrastructure. The RCA should disclose as much as it possibly can about Hilcorp’s finances, he said. “This is a huge asset very much tied to the value of state revenue,” Halford said. “The company’s finances should not be protected from public view…any more than is absolutely necessary.”

Final EIS released for ANWR lease sale

A federal agency on Thursday recommended a plan to offer the entire coastal plain of the Arctic National Wildlife Refuge in Alaska for lease to oil and gas companies, rejecting more restrictive alternatives and setting the stage for the federal government’s first lease sale there by year’s end. The Bureau of Land Management plan, contained in its final environmental report of leasing in the refuge, could allow the oil industry to nominate tracts from the entire 1.6 million-acre coastal plain, about 8 percent of the refuge. The recommendation offers the most acreage available for petroleum extraction, compared to a list of options the agency proposed in a December draft report. But it would restrict surface use in many areas, such as near rivers and coastal areas, and land used by denning polar bears and caribou. Alaska leaders applauded the plan in a statement from BLM announcing the release. “This is a major step forward in our decades-long efforts to allow for responsible resource development in Alaska’s (coastal plain), and I thank Secretary (David) Bernhardt and his team for their thousands of hours of hard work,” said Sen. Lisa Murkowski, R-Alaska. “I’m hopeful we can now move to a lease sale in the very near future, just as Congress intended, so that we can continue to strengthen our economy, our energy security, and our long-term prosperity.” “Forty years after Congress selected the Arctic Coastal Plain for potential energy development, the Trump Administration is making good on that decades old potential,” Gov. Mike Dunleavy said. “I join with all Alaska governors since 1980 in assuring the nation and the world that we develop our natural resources responsibly. I look forward to the lease sale scheduled for later this year.” The Republican-led Congress in 2017 approved lease sales in the refuge in the tax-reform bill, and directed BLM to oversee them. Congress in 1980 set aside the coastal plain for possible development. The federal agency’s recommendation came as efforts continue in Congress to halt drilling in the ecologically important region in northeast Alaska, home to climate-threatened polar bears, migrating caribou and other important species. Bills to stop the drilling, including one passed in the House on Thursday, aren’t expected to clear the Republican-led Senate. The bigger question may be how much interest industry will show in the politically divisive and costly region near the Canadian border about which little is known by the oil industry. Major oil company BP recently announced it would sell its long-held stake in the only well ever drilled in the refuge, an effort that ended in 1986 under an exception allowed by Congress. The sale was part of BP’s decision to sell its Alaska assets to Hilcorp Alaska. Members of the Gwich’in Steering Committee, a voice for several Gwich’in communities in Alaska and Canada that oppose drilling in the refuge, criticized the BLM report on Thursday. The Gwich’in people live outside the refuge but have hunted caribou in the refuge for eons. “There is nothing final about this (environmental report) except that it demonstrates that this administration and the Alaska delegation will disregard our way of life, our food, and our relationship with the land, the caribou, and future generations to pander to industry greed,” said Bernadette Demientieff, the committee’s executive director. Conservation groups have argued that relatively little money will be generated by the lease sale, based on past sales in Alaska, countering a key rationale by the Trump administration that drilling in ANWR could be a boon for the U.S. and Alaska treasuries. The Defenders of Wildlife said about three-quarters of the coastal plain is designated critical habitat for Beaufort Sea polar bears that increasingly spend time ashore as sea ice melts, and whose numbers are declining. Development will lead to a spiderweb of airstrips, roads and pipelines, plus oil spills and increased pollution, the group said in a statement. “This Arctic National Wildlife Refuge leasing plan is another disgraceful example of the Trump administration’s continued rejection of environmental law, sound science and the wishes of the American people in protecting wildlife and wild lands," said Jamie Rappaport Clark, president of Defenders. “Selling off the entire coastal plain for oil development presents an existential threat to threatened polar bears and is opposed by 70% of Americans.” Members of the Alaska congressional delegation say that most Alaskans support development in the coastal plain. The report’s release marks the “culmination of decades of work,” said Rep. Don Young, R-Alaska. “I have fought for responsible oil and gas development on the coastal plain since ANWR was created, and I am immensely pleased that we have reached this stage.” “For decades, Alaskans have been urging their federal government to open the (coastal area) of ANWR for exploration,” said Sen. Dan Sullivan, R-Alaska. “At long last, Congress voted to allow it. Now, the administration is working diligently to fulfill Congress’ directions in a transparent and responsible process.” Chad Padgett, Alaska director of the Bureau of Land Management, said precautions under the recommended plan include areas along rivers where the surface would be off limits for use. The plan could allow rare exceptions, such as for a pipeline that must cross a stream. “For all the waterways, we have setbacks to provide for no surface occupancy to allow caribou to get away from insects,” he said. He said a strong leasing program could create as many as 2,500 direct jobs during peak years and generate hundreds of millions of dollars annually in federal and state royalties. The federal Energy Information Administration has estimated that about 3.4 billion barrels of oil would be produced in the refuge by 2050. The first drops of oil, if enough is discovered, aren’t expected to flow until at least 2027. The Interior Department could approve a final leasing plan next month. The BLM hopes to hold a lease sale before the end of this year, Padgett said.

Hilcorp’s swift growth in Alaska capped by Prudhoe purchase

Hilcorp Alaska’s $5.6 billion acquisition of BP’s assets in Alaska, announced Aug. 27, marks a “crowning achievement” for a Houston, Texas, company that has rapidly risen to become a major player in Alaska’s oil patch, after establishing a foothold in Cook Inlet seven years ago, observers say. The privately held company, founded by billionaire Jeffery Hildebrand in 1989, is known for squeezing more oil out of aging fields, a pattern seen in Cook Inlet after it began buying assets in 2012. There, the company soon became the dominant oil and natural gas producer in the Southcentral Alaska region, where it now runs a collection of offshore platforms and recently spent $90 million to upgrade oil delivery. The company’s Cook Inlet purchases attracted little attention compared to the company’s bold move in 2014, when it acquired two fields from BP, and parts of two other fields, in a $1.25 billion deal. “In Alaska, we’ve seen them double and double again, because they seized the opportunity,” said John Hendrix, former chief oil and gas adviser to former Gov. Bill Walker. “My hat’s off to them.” Hendrix said Hilcorp has strong buy-in from employees — stoked by incentives such as Hilcorp’s $100,000 bonus to all employees in 2015. “They won’t take risks,” but they also won’t burden their business with unnecessary bureaucratic delays, he said. Joe Balash, now an assistant U.S. Interior Secretary, was deputy commissioner for the state Department of Natural Resources when Hilcorp was originally hunting for deals in Cook Inlet. He said the company had bigger plans for Alaska even then. “In our very first conversations we had with Jeffery Hildebrand in Houston, when they were looking at the acquisitions in Cook Inlet, he had his eye on the North Slope,” Balash said. In 2014, Hilcorp proved itself an effective operator in the Arctic Alaska region, continuing to partner with BP on fields where both companies held stakes, he said. “They impressed BP management to the point they were obviously able to develop a relationship necessary to make a transaction like this possible,” Balash said. Hilcorp’s reputation in Alaska took a hit in 2017, after state regulators highlighted a long list of operating infractions, and a subsea pipeline in Cook Inlet leaked natural gas for months, with icy, cold water complicating repairs. But the company has taken steps to improve its operations in the state, regulators have said. The company employed more than 400 people in Alaska last year, and produced more than 75,000 barrels daily of gross oil and gas equivalent. The acquisition announced Aug. 27 cement’s Hilcorp’s position in Alaska, and will make it the second largest producer in the state when the deal is finalized, observers said. “For Hilcorp, buying BPs assets, including assuming operatorship of Prudhoe Bay, is a crowning achievement to the Alaska business they have built since 2012 to become the largest private operator in the state,” said an emailed statement from Enverus, an oilfield data services firm in Texas. How Hilcorp Alaska will integrate BP’s workforce of 1,600 employees is unknown. That workforce is vital to operating Prudhoe and conducting other work, according to an email from Hilcorp spokesman Justin Furnace. “Our plans for that workforce will develop as we determine how we will integrate the acquisition into Hilcorp’s existing operations and we receive a list of eligible employees from BP so we can begin the interview process,” Furnace said. Hilcorp’s next big move in Alaska could be at its offshore Liberty field, another North Slope acquisition from BP, in the Beaufort Sea. Hilcorp has moved rapidly in its efforts to develop the field. It hopes to launch oil production in the coming years. The field could produce up to 70,000 barrels of oil daily.

Furie declares bankruptcy; cites $105M in unpaid state credits

An Alaska natural gas producer filed for bankruptcy protection last week, pointing to challenges producing enough gas in Cook Inlet and the state’s decisions to withhold many millions of dollars in cash tax credits the company had counted on. Furie Operating Alaska, owner of an offshore production platform in Cook Inlet and a subsea pipeline, wants to quickly find a buyer, the company’s interim chief operating officer told federal bankruptcy court in Delaware Aug. 9. “I believe a prompt sale of the debtors’ assets and/or equity interests represents the best option available to maximize value for all stakeholders in these Chapter 11 cases,” said Scott Pinsonnault, Furie’s interim chief operating officer, in a filing in federal bankruptcy court in Delaware last week. The company, with offices in Anchorage, faces debts of about $450 million, primarily for large loans used to cover costs, according to its petition for bankruptcy. The value of its assets falls somewhere between $10 million and $50 million, the company said in its petition for bankruptcy. Among the Alaska contractors owed is Cruz Construction, providing oilfield support services. They’re due $21,000, court records show. “For us it’s unfortunate, but hopefully they get things together in Chapter 11 and get their debts paid,” said owner Dave Cruz. “The real big factor to me is the state promised payback on tax credits and that got vetoed,” Cruz said. “That hit ‘em pretty doggone hard.” After oil prices and state revenues crashed starting in 2014, the state began reducing the annual tax-credit payments it had long made to small independent companies to encourage oil and gas exploration. The state began paying the legal minimum required by law, rather than the amount companies applied for and had come to expect. Former Gov. Bill Walker began capping the payments in 2015, and the Legislature later followed. The Legislature has since ended the program, but the state still owes many companies. Furie says it’s owed $105 million. Other companies have also faulted the reduced credits for hurting operations, including Texas-based Caelus Energy that has sold off North Slope prospects and struggled to advance what it calls a large oil discovery at Smith Bay on the North Slope. Furie also had trouble delivering enough natural gas to meet contractual agreements to utilities, including early this year when an “operational” problem blocked its sub-sea pipeline, halting gas deliveries for a period of time, Pinsonnault told the bankruptcy court. The company lost about $200 million combined the last two years, selling about $65 million in gas over that period. It employs seven workers and contractors. “Historical construction delays and cost overruns” added to the problems, and the company struggled to pay its debts, he said. Lindsay Hobson, a spokeswoman with Enstar Natural Gas, said Furie has been unable to deliver “expected volumes of gas” for a number of months. The company provides a small part of Enstar’s gas portfolio, she said. “We’re in pretty regular communications and are in negotiations about the future of that contract,” she said. Furie owes $7.2 million to the Department of Justice, its petition shows. That’s tied to the $10 million penalty the company agreed to pay in 2017 after it violated the Jones Act. The act requires that American ships and crews be used to haul goods from one U.S. port to another. In 2011, the company used a foreign ship to haul a jack-up drill rig from Texas to Alaska. The company, named Esopeta Oil Company at the time, was racing to start drilling in Alaska, to take advantage of the tax credits, the federal government said. Officials with Furie could not be reached Aug. 16.

Initiative filed seeking $1 billion tax hike on oil industry

A group of Alaskans has launched an effort to put a measure before voters asking them to increase taxes on the oil industry, as the governor moves to close the deficit with large cuts but no new taxes. Oil companies and an industry trade group swiftly condemned the effort, saying it would lead to less investment and oil production in the North Slope oil patch. “Vote Yes for Alaska’s Fair Share” registered as a campaign group with state regulators on Aug. 19. On Aug. 16, an initiative group applied with the Division of Elections so it can collect signatures in support of a two-page ballot proposal. The so-called “Fair Share Act” would alter the state’s 2013 oil-production tax passed as Senate Bill 21. It would apply to the North Slope’s large, legacy fields — currently Prudhoe Bay, Kuparuk and Alpine — held by major oil companies, said Robin Brena, an initiative committee member and an oil and gas attorney who chaired former Gov. Bill Walker’s Transition Subcommittee on Oil and Gas. The measure would bring in about $1 billion extra in production taxes, he said. “Alaskans should receive their fair share from the sale of our oil,” Brena said in a statement. BP estimates taxes on the industry would increase between $1 billion and $2 billion, if voters approve the measure, based on an initial analysis. That would stunt investment in Alaska as companies put their money in other oil provinces around the world, according to Megan Baldino, a BP spokeswoman. “We are still reviewing the language but the initiative appears to propose a very substantial increase in oil taxes that would make investing here less attractive,” wrote Natalie Lowman, a spokeswoman for ConocoPhillips, in an email. The initiative effort’s other two committee members are Jane Angvik, former Anchorage Assembly chairwoman, and Merrick Peirce, a former chief executive with the Alaska Gasline Port Authority. The campaign group’s treasurer would be Ken Alper, former Tax division director under Walker. Co-chairs of the campaign group include Sen. Bill Wielechowski, D-Anchorage and former Sen. Joe Paskvan, a Democrat from Fairbanks. The proposal would leave the 2013 tax system in place for small and new fields. Large prospects being pursued by ConocoPhillips and Oil Search could eventually fall under the new proposal, but it would take close to a decade of sustained production before that would happen, based on company production estimates. “We’re trying to help the (smaller) independent companies, and we’re certainly trying to not cause harm,” Brena said Aug. 19. “The larger, more profitable fields being harvested are in a better position to pay their fair share.” BP, ConocoPhillips and ExxonMobil are the major lease-holders at Prudhoe Bay. ConocoPhillips owns and operates Kuparuk and Alpine. The proposed initiative comes with Alaskans gripped by a tense debate over how to close the state deficit. Residents speaking at budget hearings this year have often called for increased oil taxes as one way to generate more state revenue. State lawmakers and the Dunleavy administration are expecting to weigh the impacts of any potential changes to the 2013 oil-production tax law in the legislative session that begins in January. The initiative group announced the effort Aug. 19, the same day Gov. Michael J. Dunleavy vetoed more than $200 million from the Legislature’s operating budget bill. Kara Moriarty, chief executive of the Alaska Oil and Gas Association, an industry trade group, said the measure would lead to less future oil production as Alaskan companies slow investments. “I get it, the state’s fiscal situation is concerning and as an Alaskan, that goes for me too,” said Kara Moriarty, chief executive of the Alaska Oil and Gas Association, a trade group. “But while this can seem like an easy fix, in reality it’s bad policy and I’d argue irresponsible to put forth a policy proposal of this magnitude when you don’t know the impacts.” Peirce, an initiative committee member, said the 2014 law isn’t working. “The Fair Share Act will help keep more money from the sale of our oil in Alaska,” he said. “Keeping more money in Alaska will help improve our economy — which is among the worst in the United States — avoid further layoffs from Gov. Dunleavy’s budget cuts, and create new jobs for Alaskans.” In 2014, a group of Alaskans attempted to repeal the tax system with a referendum and restore an earlier tax law that significantly increased state revenue at higher prices. That grassroots effort was vastly outspent by the oil industry, and failed at the polls. The measure proposed Aug. 16 would make major changes to the law for the legacy North Slope fields, including: • The gross minimum production tax, which has kicked in in recent years when oil prices are low, would increase from 4 percent to between 10 percent and 15 percent, depending on the price of oil. • The net production tax, which has kicked in when oil prices are higher, would eliminate the per-barrel credit provided to oil producers. That would save the state about $1 billion annually, Brena estimated. • Producers’ production tax returns and supporting documents would be public, rather than confidential as they are today. The Division of Elections as of Aug. 19 lists three other active petitions that are at least undergoing review by the state, including to reform public education, move the Legislature to Anchorage, and to overhaul elections. A citizen’s effort to recall the governor Dunleavy is also underway, following his proposals for large cuts and other actions. The initiative group turned in well over 100 signatures from registered voters with its application form, Brena said. The signers will serve as sponsors. The office of Lt Gov. Kevin Meyer, who oversees the Elections division, has 60 days to review the group’s application, said Lauren Giliam, a deputy press secretary for Dunleavy, on Aug. 19. The certification deadline is Oct. 15, she said. Meyer’s office will work with the Department of Law and the Elections division to confirm the proposed bill, application and sponsors meet requirements, she said. If the application is certified, the initiative committee will have a year to turn in 28,501 qualifying signatures, an amount equal to 10 percent of those who voted in the preceding general election. A minimum number of signers must live in at least 30 of the 40 House districts in the state. The group hopes to get the measure on the November 2020 ballot, Brena said.

Vetoes find few defenders across economy

A number of Alaska business and industry groups have in recent weeks opposed Gov. Mike Dunleavy’s $444 million in vetoes to the state’s operating budget, over concerns about what the fallout might be on the state’s precarious economy. Many such groups — including the Alaska Bankers Association, the Alaska State Home Building Association, the Alaska Credit Union League, and numerous others — expressed alarm about the cuts or supported the veto override vote that failed in the Legislature earlier this month. Meanwhile, some prominent trade groups have not taken a specific position during the remarkably tense state budget debate. The governor’s office has declined to name business groups that support his vetoes. Twenty business leaders who said they represent billions of investment dollars in Alaska argued in a newspaper ad in the Anchorage Daily News earlier this month that the $444 million in vetoes, atop the $190 million already cut by the Legislature, will eliminate critical public services and thousands of jobs, likely pulling the state back into a recession. Two of the signatories in that ad were Ed Rasmuson, a retired banker and Rasmuson Foundation chairman, and Jim Jansen, chairman of freight transporter Lynden Inc. The two men were key donors to Dunleavy for Alaska, an independent expenditure group in support of the governor’s election last fall. Rasmuson said many in Alaska’s business community don’t like what they’re seeing. “The cuts are too much right away,” he said July 22. “We’ve got to do it on a gradual basis to get down to a certain figure. It should be negotiated with the governor and the Legislature, but it should not happen all at once.” “Some (social service) organizations can’t survive with these massive cuts, and we are going to rue the day we’ve done this,” he said. Since the failed override vote in the Legislature, lawmakers have remained gridlocked in Juneau. As of July 22, the Alaska House of Representatives had failed multiple times to approve a fix for the state’s capital budget and another key budget vote. A bill that has been introduced in the House would restore much of the funding cut by the vetoes. The inability of lawmakers to reach an agreement is “disheartening,” said Kim Reitmeier, executive director of the ANCSA Regional Association comprised of 12 CEOs for Alaska Native regional corporations. “I’ve never seen anything this disjointed,” she said. It’s hard to believe the state faces this situation, she said. “It’s just a little mind-boggling.” ‘Inappropriate and irresponsible’ An overwhelming number of Alaskans have said they support the governor, his spokesman Matt Shuckerow said recently. “A lot of these folks will say privately that they support what the governor is doing,” Shuckerow said. “Unfortunately, the political climate has grown to where there’s a lot of anger and division, and so some people, perhaps business owners and groups and organizations, are choosing not to weigh in publicly on some of these things.” Public testimony at hearings by the House Finance Committee last week was more than 70 percent in favor of restoring the cuts vetoed by Dunleavy, according to a tally distributed by Alaska House Majority Coalition. A compromise with more moderate cuts and a sustainable Permanent Fund dividend would be best for the state, said Jansen, with Lynden. “It is inappropriate and irresponsible to hold the capital budget hostage for a $3,000 PFD,” Jansen said in an emailed statement July 22. (Paying out a full PFD to Alaskans was a central point of Dunleavy’s campaign last year.) Jansen said he was “extremely” concerned the Legislature might not reach a deal on the capital budget in time to avoid losing large amounts of federal matching dollars. The stalemate is “causing uncertainty that will adversely impact the economy,” he said. Rasmuson said he supports future annual cuts on the scale of the $190 million the Legislature made this year, right-sizing state government over time. “I’m very upset with what’s going on, obviously, but it’s in the hands of the Legislature and the governor,” Rasmuson said. “For God’s sake, we have got to get a capital budget approved, because we will lose over a billion dollars worth of federal funding and that will hurt everybody.” Rasmuson said he has “more than a little” buyer’s remorse after supporting Dunleavy for governor. Rasmuson is a Republican and Dunleavy was the only option, Rasmuson said. ‘Too much too quick’ In an “open letter” to lawmakers earlier this month, the ANCSA Regional Association argued “the drastic cuts” proposed by the governor “will plunge Alaska into a fiscal and social crisis.” The group still holds that view, Reitmeier said on July 22. Members of the state’s finance industry formally urged legislators to override the governor’s cuts. Bankers here are concerned about the “extreme consequences to our local and state economies” if Dunleavy’s vetoes stand, the Alaska Bankers Association vice president said in a letter sent to legislators and the governor July 5. Represented in that letter were Northrim Bank, Wells Fargo, Key Bank, First National Bank Alaska, Denali State Bank, First Bank, and Mt. McKinley Bank. “To get seven banks who are all in a fist fight every single day over customers, loans, deposits … is a pretty extraordinary effort,” Michael Martin, vice president of the group, said in a recent interview. He’s also chief operating officer at Northrim. The banking association supports a sustainable budget, it said in the letter, but the massive proposed reduction “is too much too quick.” “Fewer employees and students means fewer residents and fewer dollars circulating through our economy, resulting in reduced business activity,” the letter said. In a response letter from Dunleavy back to Martin addressed the same day, the governor disagreed that the cuts would be too much for the economy to handle. “I am not sure why the bankers in Alaska are so adamantly opposed to individual Alaskans receiving a statutory PFD,” Dunleavy said in the letter. Providing a full Permanent Fund dividend “will help restore the necessary trust with the people of Alaska. Only then will we have a real opportunity to establish a stable, durable fiscal plan.” ‘Last best chance to right-size the government’ Ken Fuller, an owner of Arcticorp, a commercial rental property company in Anchorage, said Monday he supports the large cuts proposed by Dunleavy. The state has waited too long to make them and there are too many state employees, he said. “This is our last best chance to right-size the government relative to our income as a state,” Fuller said. The Alaska Policy Forum, a conservative think tank, supports Dunleavy’s budget-cutting. “We are in favor of the vetoes in terms of the dollar amounts,” said Bethany Marcum, the group’s executive director and a former aide to Dunleavy when he served in the state Senate. Judy Eledge, president of the Anchorage Republican Women’s Club, said her personal view is that supporters of Dunleavy don’t have a lot of money to spend on ads and getting their voice out like unions or other groups. “We are a silent majority,” she said. The Alaska Oil and Gas Association does not historically take a position on the state budget, said president Kara Moriarty, and that’s also the case this year. The Alaska Support Industry Alliance — which represents the oil and gas sector — also has no position, said CEO Rebecca Logan. The Alaska Chamber does not have a position on the budget proposal or Dunleavy’s vetoes, chamber president Kati Capozzi said during a July 22 presentation to a room of business leaders at the Dena’ina Civic and Convention Center. “I think there’s a keen interest from all the statewide business associations that we see some resolution and we see it soon,” Capozzi said in an interview later. “We’re all anxious to know what the plan is and get on with business.” The Alaska Miners Association did not take a position on the Legislature’s override vote, said executive director Deantha Crockett. But members of the group are “tremendously” concerned about gridlock in Juneau. “And not from a ‘What’s going to happen to the mining industry?’ standpoint,” she said in an interview July 22. “It’s a, ‘What happens to my employees that live here? What happens when there is such gridlock like this?’ Investors around the world are looking at Alaska and going, ‘That place is a zoo right now.’”

Alaska Native split over ANWR on display at Anchorage hearing

During the federal government’s last public hearing in Alaska before oil leasing is allowed in the Arctic National Wildlife Refuge on Feb. 11, some 50 protesters silently holding “Listen to the People” banners turned their back on a federal official trying to explain the regulatory process before drilling can occur. Outside that hearing room at the Dena’ina Center in Anchorage, an equally large audience of Alaska Natives from the North Slope region where drilling is set to occur held signs saying “It’s our backyard,” and called for oil development in the 19-million-acre refuge. “Government is listening to the people,” said Crawford Patkotak, chairman of the Arctic Slope Regional Corp. and a speaker at the pro-drilling rally. “Thank God for that.” “Bought and paid for Natives!” Natasha Gamache, an Alaska Native from Nome, shouted at him. “We’re supposed to be protecting the land.” “1002!” drilling supporters shouted, a legal reference to the 1.6-million-acre coastal plain where drilling would take place. “Shame on you!” Gamache shot back. The dueling protests capped a day of public testimony at the Anchorage hearing, a tamer version of a Fairbanks meeting held the previous week, when opponents of drilling took over and began speaking publicly at what was organized as an “open-house” event without public testimony, according to the Fairbanks Daily News-Miner. Public testimony was originally not scheduled for the Anchorage meeting, but BLM changed the format following the Fairbanks complaints, said Lesli Ellis-Wouters, a spokeswoman with BLM. “It’s in response to what we heard in Fairbanks,” she said. One last public hearing on the federal government’s 700-page draft environmental report — released in December and spelling out four different options for oil development in the refuge — was set to take place on Feb. 13 in Washington, D.C. Public comment is allowed until March 13, a month-long extension from previous plans. Speakers filtered in and out of the Anchorage meeting hall through the day — the hearing lasted more than six hours — offering their view on the bitter, decades-old argument. More than 100 people signed up to speak, officials said. More than 400 people signed up to attend. Some 700,000 people commented last year, before the draft report was released, most of them via form letter, according to the BLM. The Republican Congress and President Donald Trump in late 2017 passed legislation ordering the federal government’s first-ever lease sale in the refuge, decades after Congress in 1980 set it aside for possible future exploration. Joe Balash, an assistant Interior Secretary, told reporters on Monday the Bureau of Land Management is still on track to hold the lease sale late this year, auctioning tracts to oil companies. The issue seems anything but decided. On Monday, Reps. Jared Huffman, D-Calif., and Brian Fitzpatrick, R-Penn., introduced legislation in Congress to stop the lease sale, though it’s unlikely to pass a Republican-led Senate. Balash, addressing criticism that the lease sale has been fast-tracked, told reporters the BLM has dedicated employees to developing the environmental report, allowing it to advance more quickly than past reviews when employees were engaged in multiple projects. The federal government’s final report and it’s decision, selecting an alternative for development, is expected in the fall. The development scenarios each provide protections for the Porcupine caribou herd and other prized wildlife, after the agency heard from an array of interests before the draft report was created, Balash said. Asked if he was trying to rush the process before leadership in Washington can change, Balash said that’s an issue for “political prognosticators” to comment on. “I’ve been given a job and we’re doing it as well as we can,” he said. Patkotak, while signing up to speak Monday, said drilling is an Alaska Native “right’s issue” that will benefit Alaskans with jobs and a better economy, not an argument about the climate that has been warming and cooling for ages. ASRC, the Native regional corporation, has joined two other companies to take the first exploration steps in the refuge in decades, by conducting a modern seismic survey that could support oil drilling. “The Inupiaq are the rightful owners of the resource,” and have the right to develop it, said Patkotak, a bowhead whaling captain from Utqiagvik, population 4,500. Patkotak and other drilling proponents wore “We stand with Kaktovik — Open ANWR!” buttons, a reference to calls by the village, the only one in ANWR, favoring drilling in the refuge. Opponents of drilling said they stood with the Gwich’in in Arctic Village south of the refuge, where drilling is opposed in part out of concerns for the caribou they hunt and other wildlife they say are threatened by development. Earlier in the day, Anchorage resident Kengo Nagaoka turned his back on Balash as he spoke, indicating his opposition to drilling and an outcome he said was predetermined by the Trump Administration. “You are here to check a box,” said Nagaoka, with drilling opposition group Defend the Sacred - Alaska, before turning to the audience to speak. “Drilling in ANWR continues the cycle of violence to our lands and our people (and) that must stop.” Sarah Siqiniq Maupin, an Utqiagvik resident with indigenous chin and forehead tattoos, said warming temperatures linked to increased oil development and greenhouse gas emissions has made the ice softer, endangering hunters traveling on frozen rivers and ocean. “Climate change is devastating our world,” she said. “What happens in the Arctic affects everyone.” Ken Federico, who recently worked for a drilling company on the North Slope, and is chairman of the Southcentral Alaska Dipnetters Association, said the oil industry can drill in the refuge and protect the environment. “It can be done responsibly,” he said.

Governor moves to fire chair of Alaska oil and gas regulatory commission

Republican Gov. Mike Dunleavy is moving to fire the chairman of the commission that oversees oil and gas operations in Alaska, accusing him of five offenses including security breaches, chronic absenteeism and browbeating other commissioners, according to a Jan. 17 letter from the governor. The two-page letter provides limited details of the alleged missteps by Hollis French, an attorney and former Democratic state senator from Anchorage. French was appointed to the three-member Alaska Oil and Gas Conservation Commission in 2016 by Dunleavy’s predecessor and former opponent in the governor’s race, Bill Walker, an independent. “I think this is happening because I have been firmly standing up for the public interest in oil and gas conservation,” French said Friday. The governor’s letter to French lists “potential grounds" for his removal from office “for cause.” A three-day public hearing on the issue ended Friday. Private attorney Tim Petumenos served as hearing officer after accepting a request from the governor to do so. French, on Friday, said he submitted an exhibit showing correspondence between his two fellow commissioners, Dan Seamount and Cathy Foerster, addressing their attempt to oust him from the board. Petumenos said the exhibits in the case would be made public after he issues his findings in the coming days. “In May of last year, I sent the governor a letter about this topic,” French said Friday, referring to Walker. “In response to this letter, one commissioner wrote to another, ‘we may now have a for-cause case,’ meaning we may now have reason to get rid of me from the commission.” Asked why the commissioners sought his ouster, French on Friday shrugged and said he would not comment before Petumenos issued his findings. The governor will make the ultimate determination in the case, Petumenos said Friday. The state Department of Law conducted the investigation into the case, said Matt Shuckerow, a spokesman for Dunleavy. The governor’s letter says that French, who has a salary of $145,000 annually, breached “critical” security protocols by giving the press information about the “means of accessing” confidential data, as well as the whereabouts of that data, from the lone well drilled in the Arctic National Wildlife Refuge in the mid-1980s, known as KIC-1 well. Dunleavy does not accuse French of inappropriately releasing the data itself. Information about what the well uncovered has been one of the industry’s tightest secrets, and speculation has only increased as the federal government over the last year moved to allow the first drilling in the refuge since then. The governor’s letter does not provide additional detail about the security breaches. French, under questioning at the hearing Friday, acknowledged he had provided details about the location of the data, and security measures associated with it, in July 2017, to the Anchorage Daily News for a story about the secrecy behind the KIC-1 well. French told Petumenos he understood that a 1992 settlement between the state and oil companies was meant to protect the data the well had found, but not details about its location or security. “My reading of the settlement agreement is that the whole point of the exercise is to keep the data secret. That is, what did that company learn when it drilled that well? What were the (rock) strata? The (rock) porosity? What’s going on downhole?" French said. Foerster, in an interview with ADN for the same 2017 story, also shared the data’s location and details about the security measures surrounding it. Foerster on Friday told the ADN she did not. When pressed that she did, she said: “I’m not under investigation.” Foerster, a commissioner since 2005 who plans to leave the agency when her term ends this month, on Friday sat beside and conferred with the state’s attorney, Dana Burke, a senior assistant attorney general who is representing the state’s case. Foerster declined to address French’s allegation that she sought to oust him. “Out of respect for the process and the parties involved, I have nothing to say,” Foerster said. At least one former commissioner, David Johnston, in a story in the Daily News in 1995, shared details about the data’s location in the agency’s Anchorage office, and some of the complicated security procedures, locked behind a steel door, with two sensors to detect burglars. AOGCC, a quasi-judicial state agency, typically spends its time reviewing oil and gas operations, periodically levying fines for violations to prevent waste and accidents. Internal disputes rarely reach the public eye. But in 2003, Sarah Palin was the public member and chair of the board -- the same position held by French -- before she became the state’s governor. Palin found Randy Ruedrich, the former chief of the Alaska Republican Party, doing party business in his state job as the petroleum engineer on the commission. Ruedrich resigned from the commission that year. He settled state ethics charges by admitting wrongdoing and paying a fine of $12,000. Kevin Fitzgerald, an attorney representing French, said after the hearing that much of the tension on the commission now is related to French’s goals of expanding the agency’s jurisdiction to prevent more natural gas from being wasted. The other commissioners have disagreed with French, Fitzgerald said. The governor’s letter also alleges French: • Typically comes to work four hours daily or less, despite policy that sets work weeks at 37.5 hours. • Has “disrupted” the commission by pervasively browbeating fellow commissioners for decisions he doesn’t agree with. The letter does not describe specific incidents. • Publicly promoted views contrary to the commission’s position. The letter does not provide specific details. • Refused to perform job-related tasks, and pursued non-work interests on the job. Again, specific details aren’t provided. “Alaskans reasonably expect, and have the right to, commissioners, agency heads, and other high-ranking officials that perform the work they are paid to do, and who do not actively undermine agencies they represent,” Dunleavy said in the letter. Dunleavy, in a Jan. 22 letter to Petumenos, said the critical question is whether there is sufficient evidence to remove French from office for cause associated with misconduct or neglect. State law allows a governor to remove an oil and gas commissioner “for cause," but must give the commissioner a chance to defend themselves in a public hearing. Dunleavy, in that letter, asks Petumenos to forward his findings by Feb. 18. Petumenos said he plans to do so earlier than that.

Busiest exploration season in decades planned for this winter

The number of exploration and production rigs working on the oil-rich North Slope should reach its highest level in 20 years this winter, state officials say. Oil field employment is higher than last year, modestly, but a first in more than four years. And the state just had one of its strongest North Slope lease sales in recent history. Those factors and others show the recent plunge in oil prices has not dampened industry’s expectations for the region, amid newfound interest in a little-tapped geological formation, the Nanushuk, state officials indicated in a meeting with the Senate Finance committee last week. But with long development windows for Alaska projects, much of the new oil production is still years away. “It’s very good news” but the state will stay stuck in a fiscal “ditch” at least for at least the next couple of years, said Sen. Bert Stedman, R-Sitka and Senate Finance Committee co-chairman, during the meeting. Still, state authorities said they’re encouraged by positive signs showing that investment in the oil and gas sector, a key driver of Alaska’s economy, is on the rise. In a first since 2014, the sector employs more people than it did one year earlier, said Neal Fried, economist with the Alaska Department of Labor and Workforce Development, on Jan. 22. About 9,250 people worked in the industry in November and December, a year-to-year increase of 100 jobs. The rise followed a long period that saw thousands of oil and gas workers laid off, helping make Alaska unemployment the nation’s worst, at 6.3 percent in December. “The numbers are not dramatic,” said Fried, who was not part of the Finance Committee meeting. “But the fact it appears that the trend is over is what’s real important. It’s important to people working there, and it’s an important signal to our economy.” North Slope oil prices that are critical for supporting industry operations — and revenue for companies and Alaska — sank after breaching $85 a barrel in early October, to current levels just above $60. Still, the recent prices are an improvement from previous years, creating a better environment for the industry, he said. “There’s been volatility, yes, but the price environment has improved a lot, even with the somewhat lower prices in recent months,” Fried said. The North Slope rig count is expected to reach its highest level in two decades, with an estimated 18 exploration and production rigs expected to operate this winter, said Graham Smith, permitting manager in the state’s Oil and Gas Division, in an email on Tuesday. That’s higher than the 17 rigs in 2014, a year of high oil prices, he said. “Some of our legacy fields are picking up rigs, we haven’t seen that for the past four years,” said Chantal Walsh, Oil and Gas division director, speaking to the committee Jan. 24. “Additional to that, we have a high level of exploration activity.” ConocoPhillips, looking to develop the large Willow field, is leading the way with plans to complete its largest Alaska exploration season in 16 years, drilling six to eight exploration and appraisal wells this winter. Oil Search has said it is drilling two appraisal wells this winter to better understand how to develop its Pikka discovery. The large find has sparked industry interest in the relatively shallow and sprawling Nanushuk formation. Oil Search on Jan. 24 reported “encouraging” results from the first well it drilled this winter, with oil confirmed in “hydrocarbon-saturated, high porosity sand,” said Peter Botten, Oil Search’s managing director. The company, based in Papua New Guinea, has rapidly grown its Alaska operations over the past year. It boosted the workforce to more than 100 employees from just a few, after buying a stake in Pikka in late 2017. Also this winter, BP is conducting a large seismic shoot to better understand future production potential in the state’s main legacy field, Prudhoe Bay. “There is a lot more activity, which translates to jobs for people,” Walsh said. Smith said other positive signs of rebounding North Slope activity include a strong lease sale in November. The state received high bids of $27.3 million from oil companies, the third highest in the last 20 years. The extra activity doesn’t necessarily mean additional oil production, Walsh cautioned. “It doesn’t lead immediately to adding money to the state general fund, but it is an exciting indication” that the state’s fortunes are improving, she said. Oil production at Pikka and Willow, perhaps the state’s most promising discoveries awaiting development, aren’t expected to begin producing oil until about 2024. Production could reach about 100,000 barrels daily at each field, possibly more at Pikka. Tax write-offs associated with the cost of developing Pikka and Willow will lower revenue for the state, officials said. Also, at Willow, located on federal land, half the royalties would go to the federal government, and the rest would be set aside by law for distribution to North Slope communities, reducing state revenue. Over roughly 16 years, Willow could bring about $7 billion in revenue to Alaska, the state estimated. Pikka, on state land, could be worth about $10.5 billion during that length of time.

State investigating death at Hilcorp operation on Slope

State agencies and oil field companies are investigating the death of a worker killed Friday in a “pipe mishandling incident” at a North Slope field operated by Hilcorp Alaska, according to a state official. New but limited details emerged Dec. 11 about the early-morning fatality at Milne Point field. Hilcorp, a company that has previously come under investigation for multiple safety violations, and contractor Kuukpik Drilling, the worker’s employer, declined to provide information about the accident while the case is under investigation. “It’s a pretty emotional time for all of us,” said Kenny Overvold, general manager of Kuukpik Drilling, with about 50 employees. He said the companies are conducting internal investigations and cooperating with agencies. “At this point we don’t have anything new to release,” he said. Claire Pywell, with the Alaska Department of Labor and Workforce Development, said the fatality occurred at 3 a.m. Dec. 7. An investigator with the Alaska Occupational Safety Health and Division flew to the scene that day, she said. The victim’s name has not been released, a step awaiting family notification procedures, Pywell said. Hollis French, chairman of the Alaska Oil and Gas Conservation Commission, said he spoke with Dave Wilkins, senior vice president of Hilcorp Alaska, on Friday. Wilkins characterized the death as resulting from a “pipe mishandling incident,” according to French. The worker was struck by heavy drilling pipe, French said. “It looks like a piece of pipe was mishandled on the rig floor,” French said. “They were laying down pipe,” he said, requiring sections of pipe to be moved during a drilling operation. Hilcorp spokeswoman Lori Nelson provided a statement Dec. 11 that “the cause of the incident is not known.” “We are deeply saddened by this news and our thoughts and prayers with their family and loved ones,” the statement said. Kenai radio station KSRM reported the incident Dec. 7, noting that drilling operations were suspended following the fatality. French said the AOGCC is monitoring the investigation and will review details when it’s complete, he said. The incident does not appear to be a violation of AOGCC procedures, he said. In an earlier incident at Milne Point in 2015, the agency investigated the near-suffocation of three contractors for Hilcorp that improperly used nitrogen gas during a well clean-out, forcing oxygen to be displaced from a trailer where the men were working. That led to a $200,000 fine from the agency. It also prompted a close look at Hilcorp missteps at its operations in Alaska, said French. AOGCC later released a lengthy list of Hilcorp violations dating back to 2012, not long after the Houston, Texas-based company began operating in Alaska. But AOGCC later credited the company for taking steps to prevent future problems. The improvements included the company’s Cook Inlet operations, after one of its sub-sea natural gas pipelines leaked for months before sea ice cleared enough for divers to safely repair it in spring 2017. In October, Hilcorp completed a $90 million project to move oil across the Inlet by subsea pipe instead of tankers, a step long sought by watchdog groups.

Habitat initiative defeated by nearly 2-1 margin

A ballot measure designed to boost protections for salmon and other fish failed by a large margin Election Night amid an onslaught of heavy opposition spending by powerful oil and mining interests. With 98 percent of precincts reporting by 1:30 a.m. Nov. 7, Ballot Measure 1 received 145,997 votes against, and 83,479 votes in favor, a 64-to-36 margin. Supporters conceded defeat early in the night. “We had an uphill battle the entire way,” said Stephanie Quinn-Davidson, a measure sponsor and former state fisheries biologist, noting the overwhelming spending by the opposition. “But this effort was unprecedented and we will continue to move this forward.” Commonly called Stand for Salmon, the controversial measure generated more than $12 million in spending. At least $10.2 million of that was spent by industry-led opposition group Stand for Alaska — Vote No on One. Opponents had contended the measure would create project delays and costs, halting some development. “The results of this election signal that Alaska remains open to responsible resource development going forward,” said Kati Capozzi, Stand for Alaska campaign manager. More than 100 supporters of the measure, gathered at 49th State Brewing Co. in Anchorage on Election Night, took early indications of defeat quietly in stride as they appeared on a big screen. Some said win or lose, they’d been successful in starting a statewide discussion about the need for stronger protections for salmon habitat. “Salmon now have a seat at the table, they’re no longer just on the platter,” said Mike Wood, another measure sponsor and a Cook Inlet commercial fisherman. Capozzi, speaking by phone from the Captain Cook Hotel Quarter Deck, where Stand for Alaska had gathered, said the large amount of money spent by the group was needed to help educate Alaskans about the negative effects the measure would have on jobs and the economy. “We just had to explain what it really meant,” Capozzi said. “Alaskans are really smart and they got it.” The measure was launched more than a year ago as major mining projects such as the Pebble prospect in Southwest Alaska advanced, and conservation groups, fishing interests and others grew concerned over state laws they considered weak and outdated. The third sponsor was Gayla Hoseth, an Alaska Native from the Bristol Bay region. More than 40,000 Alaskans signed the measure. The measure would have mandated public comment periods for major projects and added other regulatory steps before the Alaska Department of Fish and Game could permit activity affecting anadromous fish habitat. Such habitat includes streams or other waters where ocean-dwelling fish such as salmon return to spawn. Supporters saw the measure as a way to restrict, if not stop, projects like Pebble. It also would have added regulatory steps for smaller activities, and for existing mines, oilfields and other development seeking permit renewals. Quinn-Davidson said her group is ready to work with Alaska Native corporations and state lawmakers to introduce a bill that increases habitat protections for salmon and other fish. “It’s clear Alaskans want stronger protections for salmon,” she said. “We just disagree about the approach.” Alaska’s major oil producers ExxonMobil, ConocoPhillips and BP, along with mining corporations such as Donlin Gold, Kinross Fort Knox, Teck Alaska and Pebble Limited, led funding for Stand for Alaska at $1 million each. A total of about 550 organizations around the state formed the Stand for Alaska coalition. Yes for Salmon and other pro-measure groups spent at least $2.3 million. The fight over Stand for Salmon shared some similarities with the $15.3 million battle over Alaska oil taxes in 2014. Voters then faced ballot language designed to repeal and replace a new oil-production tax. Industry, led primarily by the state’s major oil producers, heavily outspent the pro-measure forces then, too. Voters rejected that measure, though by a much slimmer margin.

52nd AFN convention seeks innovative solutions

The Alaska Federation of Natives convention in mid-October will bring together more than 6,000 people from across the state for a gathering that will boost the Anchorage economy with more $6 million. The event has been held 52 straight years, long enough that some forget a fight for traditional lands started it all. Many view the gathering, which begins Oct. 18, as a cultural spectacle for Native art and dancing, a reunion for friends and family. “And there’s always politics,” said Willie Hensley, who helped form the Native organization and has attended every meeting since the first in 1966. At the time, Emil Notti, who became the first AFN president, was concerned about threats to long-occupied Native lands as the young state of Alaska selected acreage from federal inventories. Homesteaders and hunters were laying claims to cultural sites. Notti wrote the letter that called Alaska Natives to Anchorage to discuss the problem. Word spread. “Mostly in the Tundra Times (newspaper),” said Notti, now 85. “There were no Bush phones.” “All we had was mail,” said Hensley. More than 400 Alaska Natives showed up over three days, representing 17 organizations, AFN says. Their demands led to a 1971 congressional law, the Alaska Native Claims Settlement Act, providing 44 million acres and nearly $1 billion to a unique system of Native-owned corporations. A lot has changed since then. A lot hasn’t. AFN now represents about 140,000 Alaska Natives statewide, plus 200 regional and village Native corporations and 186 tribal governments. Its convention remains a political catalyst, where culturally diverse groups find unity, then promote social change. The bonds built there are critical, says Julie Kitka, the nonprofit’s president. “I love seeing people I haven’t seen since last year,” she said. “That is bar none my favorite part.” Billed by AFN as the nation’s “largest representative yearly gathering” of indigenous people, the event still runs for three days. More than 4,000 AFN delegates arrive from gobs of villages. The event is webcast to 70 nations. It features a massive Native arts bazaar with more than 150 artists, a health fair, awards ceremonies, a legal clinic, plus two nights of popular Quyana, showcasing traditional village dance groups in crowd-filled halls. The convention has grown so much that it now anchors other events. Starting off the week, on Oct. 15, First Alaskans Institute hosts the three-day Elders and Youth Conference, where leaders are born and traditions instilled. More than 1,000 participants will attend. AFN and the National Congress of American Indians are also hosting a tribal conference, to discuss views on tribal issues, on Wednesday, Oct. 17. It all makes for a busy week, capped by the convention, where election-year politics will add to the drama. A governor candidate forum Oct. 19 will pit incumbent Bill Walker against his challengers, former state Sen. Mike Dunleavy and former U.S. Sen. Mark Begich. For Alaska’s seat in the U.S. House, Rep. Don Young will meet challenger Alyse Galvin. Convention speakers will include: • Keynote Valerie Davidson, a Yup’ik who leads the state’s health department and has supported Medicaid expansion and improved health care access for Natives and other Alaskans. • Tara Sweeney, assistant secretary at Interior for Indian affairs and former AFN co-chair. • Joe Balash, assistant secretary at Interior for Land and Management. • Jacqueline Johnson Pata, executive director of the National Congress of American Indians. • Terrence John O’Shaughnessy, a U.S. Air Force four-star general, head of the U.S. Northern Command and North American Aerospace Defense Command. • Mark Trahant, editor of Indian Country Today and former Atwood Chair of Journalism at the University of Alaska Anchorage. Kitka said AFN, working with the broader Native community, has achieved many successes over the decades. Alaska Native organizations now run hospitals and clinics statewide, improving access to health care. Modern improvements have come to villages, including Internet, power plants, water and sewer systems. Over the decades, AFN has worked with Congress to address social and economic disparities, and helped protect the rights of Native subsistence hunters and fishermen, Kitka said. The best accomplishment has been the education and development of young Natives ready to run the corporate, social and health sectors their elders built, Kitka said. “That’s important because we’re dealing with a lot of change that will hit us on many fronts in Alaska,” she said. The convention theme this year, “Innovation in the Past, Present and Future,” speaks to the continuing need to tackle technological, economic and social disruptions while staying grounded in family and tradition, she said. AFN plans to focus future energy on finding ways to combat rising health care costs and improving educational opportunities, she said. Another key area will be addressing changing climate, working with state and federal agencies and others to find ways to improve erosion-threatened roads, runways and buildings in numerous villages. One idea involves creating an Arctic Development Bank, like the poverty-fighting World Bank that provides affordable loans and other funds for projects. “This last Congress, you saw major efforts for tax reform, but never saw a big infrastructure bill,” Kitka said. “We’ll see how we can get attention on infrastructure needs up here.” Building ties with the U.S. military will also be part of the group’s agenda. AFN’s policy plans for 2019 will be shaped by dozens of resolutions from delegates, after a vote on Oct. 20, the conference’s final day. Both Notti and Hensley said they’re amazed AFN has grown so large over the years. But there’s more to accomplish. Both cited the need for increased jobs and job training in rural communities to combat poverty and other social woes. Money is required these days, and climate change is altering animal populations, raising questions about access to wild food in the future. “If you can’t make a living on subsistence, you have to have a substitute,” Notti said. For those who can’t make this year’s convention, the event will be webcast live, said Jeff Silverman, a communications officer with AFN. You can find the event at the nativefederation.org website. It will also be available on 360 North, Alaska Rural Communications Service or ARCS, and GCI channels in some communities. “It’s in every village and every city,” Silverman said.

APOC hears complaint against initiative backers

The industry-led group fighting the Yes for Salmon ballot initiative told Alaska campaign regulators in a hearing Sept. 25 that their opponent is benefiting from more “dark money” than it originally thought. Also, the initiative campaign director, Ryan Schryver, said in a hearing that his paychecks come from the Washington, D.C.-based New Venture Fund. But Schryver said he reports to an Alaska organization, SalmonState, that receives financial assistance from New Venture. Stand for Alaska-Vote No on One brought the complaint Sept. 20. The group asserts that Yes for Salmon-Vote Yes on One, as well as Stand for Salmon, and The Alaska Center, have violated multiple disclosure laws. The Alaska Public Offices Commission said it will issue a ruling on Oct. 3. Members of the pro-initiative groups maintained during the hearing they have worked closely with APOC staff to avoid any reporting errors. “We value transparency,” Schryver said. “We’ve worked every step of way to do this above board.” The initiative, set to be decided by voters Nov. 6, seeks to increase salmon and other fish habitat protections in Alaska. A chunk of the Sept. 25 hearing focused on New Venture, a nonprofit charitable group. The organization is not specifically mentioned in the complaint, but is part of the “dark money” the complaint alleges, said attorney Matt Singer, representing Stand for Alaska. Holly Wells, an attorney representing groups on the Yes for Salmon side, said New Venture complies with APOC requirements. “So they are transparent,” she said. New Venture is the second-largest source of the roughly $1 million in contributions to Yes for Salmon, providing more than $200,000, almost entirely in non-monetary contributions such as staff time. Commissioners sought to understand what the group does, and whether its contribution is transparent to voters. Schryver said New Venture is a “fiscal sponsor” to SalmonState, providing financial support and administrative services such as payroll. Schryver said for practical purposes he’s an employee of SalmonState, reporting to SalmonState director Tim Bristol, a Homer resident. New Venture helps launch budding social and environmental efforts, such as SalmonState, said Lee Bodner, its president, in an email to Anchorage Daily News. Projects operate independently, so organizers can determine the best strategy to achieve goals, he said. Tim Dietz, an APOC commissioner, asked at the hearing how the average Alaskan voter can know who is supporting the campaign, if much of the contribution is from New Venture. Schryver replied: “My question would be, ‘How does the average voter know where the money is coming from with BP or ConocoPhillips or any of the groups working to fund the other side?’” “I’m the one asking the questions here,” Dietz said. “It’s obvious they get the money from oil they get out of the ground.” Oil and mining companies have provided the bulk of funding for Stand for Alaska, more than $10 million. Schryver told Dietz he did not know how every penny could be traced back to its origin. Schryver said SalmonState has other employees assisting with the campaign, with others working on other projects to protect fish. New Venture’s payment for employees who assist with the initiative shows up as a contribution to the campaign. SalmonState was involuntarily dissolved as a nonprofit corporation by the state in March. Singer said after the hearing SalmonState is “not a real organization. They call themselves SalmonState, but are just a project of New Venture Fund.” Bristol said in an interview that after forming SalmonState as a nonprofit, he learned it didn’t in fact need to be registered as one. The goal is to become completely independent in the future, he said. “The bottom line is all the ideas and strategies and tactics, everything we work on, all the issues and programs, are born here in Alaska,” Bristol said. He and Schryver said only Alaskans are working on the ballot initiative. The Alaska Center, meanwhile, has reported contributions of about $500,000 to the campaign, largely in non-monetary services, such as for door-knocking or phone calls, according to the complaint. Singer said in the hearing he thought he had identified the source of about half of that contribution. But based on information at the hearing provided by Meghan Cavanaugh, political and field director for The Alaska Center, he said he’s not sure of the “true source” of the entirety of that contribution, either. “It’s a mystery,” Singer said. Cavanaugh said the source of that contribution is The Alaska Center’s general fund. She said she’s fully disclosed what’s required by APOC, but would support efforts for broader disclosure. “My feedback to APOC would be (the required) contribution form could be more comprehensive,” she said. Schryver said his side may have made a misstep in one small area — the “paid-for-by” identifiers at the end of campaign materials. “If there’s not a ‘paid-for-by’ on it, and we didn’t catch it, apologies, we’ll work to correct it,” he said.
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